Select committee: Public Accounts Committee
Recommendation 4
Fiftieth Report - Defence Equipment Plan 2020–2030
Published 16 Mar 2021
Addressed to HM Treasury
Public Accounts Committee Defence Equipment Plan 2020-2030 All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Recommendation (the committee's words)
The Defence equipment programme is routinely jeopardised by factors that drive inflation in defence projects. Defence projects are often long-term, complex and involve new technologies, which makes them vulnerable to cost inflation. This Committee has highlighted that inflation in equipment projects can result from factors specific to the defence sector; factors which the Department admitted are not fully understood. We therefore urge the Department to develop a better understanding of these factors, which would include: the availability of new and more expensive technology during the development and build phases; the ambition to maintain interoperability with the USA and other allies; the acquisition of leading-edge capability adding to unit costs instead of accepting more utilitarian specifications which would allow the acquisition of more units; relations with contractors who are in competition with each other to develop new technology; and the culture in Commands to have the best possible equipment at the expense of increased numbers of platforms. Recommendation: The Department should undertake a comprehensive study to better understand the drivers of defence costs inflation. This should not merely Defence Equipment Plan 2020–2030 7 be a statistical exercise but should look at attitudes and behaviours within the defence acquisition system, and how commercial realities and competition with other nations drive up costs. It should report the results to the Committee.
From: Public Accounts Committee, Fiftieth Report - Defence Equipment Plan 2020–2030 (HC 693), 16 March 2021
Government response
The government responded to the whole report on 31 August 2021 (deadline 16 May 2021).
Summary written by Accountability Index from the government's response. It is not the government's own words.The government states that it agrees with the Committee's recommendations that are set out in the response, each with a stated target implementation date, and sets out related work already under way.
- On affordability, it agrees that the next Equipment Plan report must demonstrate affordability, and says that report (Autumn 2021) will set out the implications of the 2020 Spending Review settlement and the Integrated Review.
- On transparency over the additional funding, it agrees and says it "will write to the Committee before summer recess" with a summary of investment and savings decisions, with a target date of June 2021.
- On defence cost inflation, it agrees and says it will write to the Committee alongside the Autumn 2021 Equipment Plan report, and states it "is committed to changing attitudes and behaviours within the Defence acquisition system".
- On finance capability, it agrees with a target date of March 2023, noting that "It takes time to both train and recruit professionally qualified staff, but numbers will increase over time."